Terry Allison Rappuhn
Issues and Actions
Hospitals can improve cash flow by focusing on the patient's view of hospital billing.
- Take steps to ensure that patients understand what is expected from them financially.
- Use large type fonts and large amounts of white space to make bills more readable.
- Improve your revenue cycle by tailoring patient financial communications to meet patient needs.
A patient visits a provider, is asked for and pays her copayment, and receives medical treatment. Six weeks later, she receives notifications from both the payer and the provider that her account has been paid and no further amount is due.
Another patient visits a provider, is asked for and pays her copayment, receives medical treatment, and begins an 18-month process of trying to get the bill resolved. After 18 months, the provider has been paid only the initial copayment, the insurer has been contacted repeatedly and has denied the claim each time, and the patient has angrily decided to pay the entire bill even though she is convinced that the provider and insurer are at fault. She will tell at least 20 people her opinion of both.
These two glaringly different outcomes for the patient, the insurer, and the provider illustrate the importance of a streamlined, accurate, "friendly" billing process. Hospitals that consider the revenue cycle from the patient's point of view see higher patient satisfaction, lower days in accounts receivable, improved cash collections, reduced bad debts and past-due accounts, and reduced complaints per account.
Hospitals can improve financial results and operational efficiency by basing patient financial communications on strategies and techniques that accomplish the following objectives:
- Ensure the patient understands the financial aspects of the episode of care and the process for resolving the account
- Ensure procedures are in place to promptly process and resolve outstanding claims
- Ensure prompt and helpful responses to patients' questions and complaints
The patient plays an integral part in the revenue cycle. Patients who understand what they are expected to do during the billing process are more likely to do it. This is true regardless of the next step for the patient, which could include updating inaccurate demographic or insurance information, paying the portion of the bill that the patient owes, or providing coordination-of-benefits information. Although only 10 percent of a provider's total payments may be directly received from the patient, the patient plays a key role in speeding payments to the provider by providing the information necessary to obtain payment from all payers.
At or before the time of care, patients want to understand what is expected of them financially. They want claims to be processed promptly and seamlessly by both the provider and the insurer. In general, they want to be billed only after their insurance has paid its portion of the claim, and they typically are willing to pay their balance at that time. Throughout the process, they want information to be presented consistently and concisely, using understandable terminology.
The PATIENT FRIENDLY BILLING® project aims to support the development of financial communications that contribute to the patient's satisfaction with his or her hospital experience. Much of the information presented in this article has been taken from research performed as part of the Patient Friendly Billing project.
Patients want to understand their financial obligations. Although providers usually do not know the exact amount the patient will owe before a healthcare service is provided, providers can tell the patient what to expect in general terms. Patients should be told about the overall billing process and the typical time frame. Providers should present patients with information and tools to help them better understand how they can meet their financial obligations.
If the patient is expected to have a high personal liability, the provider should offer financial counseling to the patient, which might include helping the patient apply for financial assistance or arranging a payment plan.
There are two obvious exceptions to these rules. First, providers should not discuss financial obligations with an emergency patient before the patient's condition is stabilized. Second, even the best systems and processes cannot identify up-front all patients who will have high personal liabilities. The provider should help those patients who can be identified early in the process, and work with the others as they are identified.
Patients want insurance claims to be processed by the provider and insurer promptly and seamlessly. Patients are troubled when their accounts are not paid promptly or under the terms that they expected. Regardless of who is at fault, the patient is in the middle.
Providers can increase the chances of bills being paid properly by simplifying contractual relationships with payers. Complex arrangements are difficult for providers to bill, for insurers to adjudicate, and for patients to understand. Providers can also improve the chances of proper payment of the claim by sending insured patients a letter when their insurance claims are sent to the payer. The letter should thank the patient for choosing the provider for his or her healthcare needs, highlight the billing process that is under way, provide contact information and service hours for the provider, and ask the patient to confirm the accuracy of the billing or contact information and to correct the information if necessary. Such a letter both reinforces the patient's understanding of the billing process and provides an opportunity to correct a claim that may have been sent to the wrong payer or sent with erroneous information.
Patients want to be billed only after insurance has paid. They are willing to pay their balance at that time. Patients want to receive a bill showing the final amount they owe after insurance has paid. Patients in focus groups say they will not pay a bill that says "insurance pending" or has a similar statement indicating that the bill is not final. Providers agree that "insurance pending" frustrates and confuses patients.
Patients also do not want to wait an unreasonably long time to know the status of their account. If the provider and health insurer have not resolved the account within a reasonable amount of time, the patient should be sent an update on the account status. Patients consider 45 to 60 days after the encounter a reasonable amount of time to wait before getting a bill or an update.
Providers may have concerns about a possible slowdown in collections if the patient bill is sent later in the process. Several providers interviewed as part of research for the Patient Friendly Billing project agreed that the potential dollar amount of any slowdown in collections is negligible. Their conclusion assumes the organization has effective upfront collection processes and acknowledges that, in any case, many patients ignore hospital bills until after insurance has paid.
Throughout the process, patients want consistent, concise, and understandable information. The best financial communications to patients use large type fonts and lots of white space for better readability, which is especially important to older patients. The featured data elements are limited to patient name and address, responsible party, account number, date of service, and insurance policy name. Some providers would like to include patient date of birth, gender, and policy identification number because errors in those data elements will usually cause a claim to be rejected by the payer. However, patients in focus groups have objected to including this information on their correspondence because they view it as sensitive and private.
One of the most confusing problems for patients is the abundance of technical jargon and codes that providers frequently include on bills and statements. Day Egusquiza, president of AR Systems, Inc., Twin Falls, Idaho, says that patient communications should pass the "mom" test-if the communication would not be easily understandable by your mom, it should be rewritten.
Patients across the country unequivocally have said they want clear, concise, correct, and patient-friendly communications. Patients are much more likely to cooperate when they can quickly and easily understand the provider's message and the desired next step. Providers that have adopted these patient-focused revenue cycle processes consistently see improved patient satisfaction, reduced days in accounts receivable, improved cash collections, reduced bad debts and past-due accounts, and reduced calls and complaints per account.
Case Study: Meet Patients' Need to Understand the Billing Process
As part of its focus on improving patient satisfaction, HCA, Nashville, Tenn., discovered that its financial transaction process and expectations were unclear to patients. The front-end registration staff was fearful about asking for money. Patients who called with questions received different responses depending on which staff member answered the call. In summary, the internal processes were not designed and implemented to ensure that patients would understand the financial transactions process and their responsibilities.
HCA consolidated patient registration, billing, and collection activities into 10 patient account service (PAS) centers across the country. The average PAS center serves 20 to 25 hospitals. This consolidated, shared services structure allows HCA to achieve consistency in bill presentation, customer service, and billing-related processes.
HCA was determined to improve communications with patients about the financial transactions process. The company began extensive staff training focusing on effective communication with customers. Staff were trained in phone communication and communication with patients at registration and admission (including collection methods). The training incorporated role-playing within staged scenarios likely to be encountered by staff in their work with patients. Staff were trained in the use of protocols and scripts for scenarios they would frequently encounter.
At some of HCA's locations, patients are given brochures about what to expect from the billing process. The brochures include answers to frequently asked questions and phone numbers to call for information or assistance. The brochures are available in Spanish as well as English and are written at the sixth-grade reading level.
HCA also has developed standards for its call centers. The call centers track and monitor call abandonment rates, reasons for the call (using codes developed by HCA), and the number of days required to resolve issues. Incoming calls are assigned to staff based on the skill set needed to respond to the patient's specific needs. Staff members' phone skills are evaluated by call center supervisors who monitor some incoming and outgoing calls. The results of the call monitoring help supervisors tailor staff training to areas that need improvement.
HCA has seen measurable results from these efforts to improve communication with patients about the financial transaction process and expectations. Denials caused by incorrect upfront information have decreased. HCA's call abandonment rate has dropped to less than 3.5 percent across the country. The company measures the level of satisfaction patients say they have about their understanding of the transaction process, and this metric has improved. Upfront collections have increased in all locations, with some locations reporting 30 percent improvement. Patient satisfaction with the upfront collections process has improved at the same time that payments have increased.
Case Study: Keep Patients Informed
Northwestern Memorial Hospital in Chicago sends informational statements to the insured patient when the claim is billed to the payer. The statements show the payer that has been billed and the phone number and office hours for billing inquiries. Informational statements are sent to the patient until the insurer pays its portion of the claim. Once the insurer has paid, Northwestern sends a bill to the patient for the amount owed.
According to Elise Lauer, Northwestern's director of patient accounting, "NMH implemented informational statements many years ago to raise awareness and keep patients engaged in the claims-adjudication process with their health plans. This process also provided us the opportunity to communicate specific information to patients or request the patient's assistance with a specific payer. We recently changed the frequency of this communication from 30 to 60 days. We anticipate this change will reduce our printing and postage costs while continuing to provide patients with effective and timely communication about the status of their accounts."
Case Study: Present Information Clearly
Mayo Clinic revised its patient bills and monthly statements based on information obtained from patient focus groups and benchmarked data from other healthcare providers. When blind copies of the new and old statements were tested in patient focus groups, patients immediately showed a preference for the new statements even before reading either statement. Patients told the testing personnel that they liked the way the information was presented on the page because they could easily see and identify it.
Case Study: Expedite Communication through Training and Technology
The Memorial Hospital in North Conway, N.H., has seen its days in accounts receivable decrease from 63 in April 2001 to 45 in June 2003. Jeff Shutak, director of patient financial services, attributes much of this success to a focus on hospital staff. Staff are provided with training and management support to improve their communication with patients. The organization emphasizes teamwork, celebrates successes, and works to improve staff retention. In addition, The Memorial Hospital uses technology such as electronic billing, electronic verification of benefits, and (for Medicare) electronic remittance advices. Shutak notes that the combination of customer-service-oriented staff and sophisticated tools is key to providing clear, accurate financial communications to patients.
Terry Allison Rappuhn, CPA is a consultant in Nashville, Tenn., and a member of HFMA's Tennessee Chapter. She is project leader of the Patient Friendly Billing project.
Questions or comments regarding this article may be sent to the author at firstname.lastname@example.org.
Publication Date: Monday, September 01, 2003